Laura J. Martin, MD
The price of health insurance is a huge concern for most of us. There is hope -- and skepticism -- about whether health reform will impact insurance premiums and if the new law will better enable us to afford the coverage we need.
WebMD readers have asked a number of questions about the Affordable Care Act and the future cost of insurance. Here are answers to commonly asked questions:
A: If you don’t get health insurance through an employer and buy insurance on your own, health insurance exchanges that will be set up and launched by 2014 will go a long way toward saving you money.
The idea behind exchanges is to create a marketplace where individuals and small businesses finally have the same bulk purchasing power as large employers. You’ll be able to shop for coverage, choosing from a range of public and private insurance options, for the best price. With the bargaining power of potentially millions of people shopping on the exchanges, along with a mandate that everyone buy insurance -- thereby spreading financial risk among the healthy and the sick -- insurers will have an incentive to be competitive on benefits and price to attract more customers.
A: Under the current system, state insurance commissioners have varying authority to challenge insurance company rate increases. But beginning later this year, any insurance company looking to raise their individual and small group rates by 10% or more must publicly disclose the proposed increases and provide a sound actuarial justification for them.
The U.S. Department of Health and Human Services (HHS) is making available nearly $200 million in new grant funds to help states develop programs that will make insurance pricing more transparent to consumers and stop unreasonable premium increases.
Rate reviews will be conducted at the state level, except for cases in which the state does not have sufficient resources to do so. In those cases, the HHS will conduct the review.
A: Here's a look at what will happen. For the middle class, tax credits will be made available to help pay for health plans purchased through the health insurance.
If you're an individual making $43,000 or less, or a family of four making less than $88,000 annually, the government will subsidize your insurance premiums. You may also be eligible for reduced co-payments, coinsurance, and deductibles to assist with the cost of coverage. And there will be exemptions for financial hardship.
To find out how much of a subsidy you’ll be eligible for in 2014, input your financial information into the Kaiser Family Foundation’s health reform subsidy calculator.
Right now, there is no fine for going uninsured.
The Affordable Care Act does require all U.S. citizens to get health insurance or face a penalty beginning in 2014. That could change, of course, if the individual mandate, which requires everyone to have health insurance (the most hotly debated aspect of the law) is overturned.
As of now, here's how it breaks down: Starting in 2014, the tax penalty will be $95 and that amount will gradually increase to $695 per year for individuals, $2085 per family, or 2.5% of a household's income, whichever is greater.
A: Yes. Effective Jan., 1, 2011, insurers are required under the law to spend the bulk of the premiums you pay for medical care, rather than for profit, overhead, or administrative costs. Insurance carriers who sell policies to large groups of 50 or more people must spend 85% of premium dollars on medical care and those who sell to individuals and small groups must spend 80%.
The idea, says Anthony Wright, executive director of Health Access California, is to “make sure you get value for your dollar.” Health Access California is a statewide health care consumer advocacy coalition.
Health plans will be required to report to HHS annually about how much of the premium dollars they collected were spent on medical care. If they fall short of the required percentage, beginning in 2012, the companies must refund money to individuals or to employers who purchase insurance on behalf of employees.
SOURCES:Anthony Wright, executive director, Health Access California.Healthcare.gov
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